Muttley Dastardly LLP (Episode 16): Partners [Eyes Only] General Counsel taking an interest in how law firms manage their firms

In keeping with our tradition and work best practice ethic, I am assuming that you will all have been too busy to read the legal press this week. My earlier memorandum on competitor activity this week, not unduly alarming, revealed a few possibilities for proactive approaches. There were, however, two articles in the legal press this week, one of which is so potentially dangerous in its thinking that it could threaten the very foundation of our great firm. I shall deal with this matter first.

2. Briefly: Mr Novarese is putting into the minds of general counsel some fairly dangerous and subversive thinking when he states: “A recent article on Legal Week about an adviser review at Deutsche Bank reminded me of a concept that has gained traction in recent years: the notion that clients should get actively involved in the business model and inner workings of their external counsel.” I have added italics to draw attention to the salient point of concern.

3. Even in these dark days when general counsel are taking work away from firms in The City, I am advised that many still have time and the inclination to read The Lawyer and Legal Week and, I am advised, some have even taken to tweeting away on twitter – something which our Pysops unit (See: Operation Twitter Storm of October last) is particularly proud of on the premise that they may become addicted and, ergo, have less time to do valuable legal work themselves and pass it back to us.

4. Mr Novarese continues with a further subversive notion:“On one level, such a stance is taken as a sign that clients are finally taking a proactive approach to securing value from their advisers. And, to a point, there are good reasons to go down this road. For a client to insist on something as cosmetic as moving their work to fixed fees by implication will force changes to law firms because the industry’s infrastructure is so wedded to time-based billing.”

5. We do not have any issues with our clients on hourly billing since we moved to our Platinum Value Bill service with 150% of our carefully judged ‘bunce’ being paid on account, but it is the first part of the paragraph which is of concern: It would be most awkward if clients started to investigate our workings to determine whether they were getting value. The whole idea behind value billing is that we get value, not the client, and for the editor of a respected legal weekly to put these ideas out into the public domain is, frankly, (borrowing from the style of our revered leader, Prime Minister Camerondirect) ‘absolutely appalling’ and, almost certainly, a breach of our human rights.

6. Mr Novarese continues his crusade to demystify the dark secrets of our glorious profession with this remarkable statement:“And it would be ludicrous to suggest that clients shouldn’t take any interest in how law firms run their business. You would want to know that your go-to adviser had rigorous systems to maintain quality and solid standards of ethical behaviour because major short-comings in this respect would probably impact on you as the client.” I really do not need to add comment to this. Res ipsa loquitur. The man is absolutely right, of course, but being right doesn’t mean he should tell everyone? I shall agenda this for dissection at our next Partner’s meeting.

Unfortunately, The Lawyer, is also widely read in the profession and there is a danger that competitors will pick this up. I extract and quote the most dangerous idea:

But after a recession more horrible than any other recent example, the dotcom bubble included, what is today’s big puzzle for our profession, ­specifically in relation to the positioning of private client work? For years lawyers have been weaned on a business vocabulary comprising ’core and non-core’, ’objectives and ­strategies’ and ’key performance indicators’. The mantra of grow or shrivel; merge or ­meander; or go small, niche and powerful is ingrained. Private client teams have become second cousins and non-core to the ­corporate focus, and shed.

I never fully understood that reasoning. Why send your firm’s best private clients to another firm when they get ’the Knock’ (or, more likely, divorce papers), which is exactly when you want you and your business to look after them.

Distress buying is where client relationships are formed (and broken). And it is not a revelation to say that the most durable client relationships are borne out of crisis purchases where there was no beauty parade or ­presentation- probably no more than a phone call and a recommendation to the client along the lines of, “See this lawyer – they won’t be cheap but they’re seriously good and will look after you”.

8. We have, of course, formulated much of our growth on aggressive poaching and by doing our best to create distress to allow us into the distress buying market – with some success, I add, mindful of my part in the bonus discussions – item 1 on the agenda for Sunday.

Gentlemen, we meet at 1.00 on Sunday to consider our bonuses and stratagems for the following week.

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